| Valuation Method | Particulars |
| Moving Weighted Average(Also called as Perpetual weighted Average.) | In this method, the stock values are calculated and revised as and whenever there is a transaction. The stock is valuated on an average cost basis. The average is calculated for every transaction. |
| FIFO(First In First Out) | Stock valuation is done on a sequential basis. Materials, which are received first, are consumed first. The valuation is done on the basis that stocks, which are available, are of latest purchase.Generally the chronological calculation is done on a monthly basis. |
| LIFO(Last In First Out) | Stock Valuation in done on a reverse chronological order. That is, stocks, which are received last, are consumed first. Stock on hand is valued on the oldest purchase basis.Generally the chronological calculation is done on a monthly basis. |
| Weighted Average | By far, the most frequently used method in valuating the stock. In this method stocks are valued on a single average basis, calculated on a periodical basis, usually monthly.The average cost of the stock is calculated and is applied to all the transactions. |
| Last Purchase Rate | Stocks are valued simply on the last purchase rate. The stock on hand is valued as per the last purchase rate, even if purchased at different rates. This is used mainly in trades, where replacement cost of material is the major criteria. |
| Standard Cost | A fixed rate, called as Standard Cost is used for all stock valuation. This method is mainly used for manufactured items. |
Contents
Revisions
- May 18, 2014 @ 04:50:56 [Current Revision] by vv
- May 18, 2014 @ 04:50:49 by vv
- May 18, 2014 @ 04:50:19 by vv
- May 31, 2013 @ 03:11:36 by vv
- May 31, 2013 @ 03:11:33 by vv
Revision Differences
| May 18, 2014 @ 04:50:19 | Current Revision | ||
|---|---|---|---|
| Content | |||
| Unchanged: GoodBooks<strong> </strong>facilitates various methods of inventory valuation. The material receipts (add to stock) and material issues (reduce from stock) transactions are recorded. Various business transactions are made in material management in any enterprise. The net of these transactions gives the closing stock on hand. | Unchanged: GoodBooks<strong> </strong>facilitates various methods of inventory valuation. The material receipts (add to stock) and material issues (reduce from stock) transactions are recorded. Various business transactions are made in material management in any enterprise. The net of these transactions gives the closing stock on hand. | ||
| Unchanged: However, materials are procured and processed at various rates. The value of the net closing stock hand is to be calculated. There are several accepted systems and practice to calculate the value of the stock in hand. GoodBooks supports several of these methods. Generally stock valuation is a batch activity and is done on a monthly basis. | Unchanged: However, materials are procured and processed at various rates. The value of the net closing stock hand is to be calculated. There are several accepted systems and practice to calculate the value of the stock in hand. GoodBooks supports several of these methods. Generally stock valuation is a batch activity and is done on a monthly basis. | ||
| Unchanged: The following list explains each of the methods. | Unchanged: The following list explains each of the methods. | ||
| Unchanged: <table border="1" cellspacing="0" cellpadding="0"> | Unchanged: <table border="1" cellspacing="0" cellpadding="0"> | ||
| Unchanged: <tbody> | Unchanged: <tbody> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">< strong>Valuation</strong> <strong>Method< /strong></td> | Unchanged: <td valign="top" width="199">< strong>Valuation</strong> <strong>Method< /strong></td> | ||
| Unchanged: <td valign="top" width="391">< strong>Particulars< /strong></td> | Unchanged: <td valign="top" width="391">< strong>Particulars< /strong></td> | ||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">Moving Weighted Average(Also called as Perpetual weighted Average.)</td> | Unchanged: <td valign="top" width="199">Moving Weighted Average(Also called as Perpetual weighted Average.)</td> | ||
| Unchanged: <td valign="top" width="391">In this method, the stock values are calculated and revised as and whenever there is a transaction. The stock is valuated on an average cost basis. The average is calculated for every transaction.</td> | Unchanged: <td valign="top" width="391">In this method, the stock values are calculated and revised as and whenever there is a transaction. The stock is valuated on an average cost basis. The average is calculated for every transaction.</td> | ||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">FIFO(First In First Out)</td> | Unchanged: <td valign="top" width="199">FIFO(First In First Out)</td> | ||
| Unchanged: <td valign="top" width="391">Stock valuation is done on a sequential basis. Materials, which are received first, are consumed first. The valuation is done on the basis that stocks, which are available, are of latest purchase.Generally the chronological calculation is done on a monthly basis.</td> | Unchanged: <td valign="top" width="391">Stock valuation is done on a sequential basis. Materials, which are received first, are consumed first. The valuation is done on the basis that stocks, which are available, are of latest purchase.Generally the chronological calculation is done on a monthly basis.</td> | ||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">LIFO(Last In First Out)</td> | Unchanged: <td valign="top" width="199">LIFO(Last In First Out)</td> | ||
| Unchanged: <td valign="top" width="391">Stock Valuation in done on a reverse chronological order. That is, stocks, which are received last, are consumed first. Stock on hand is valued on the oldest purchase basis.Generally the chronological calculation is done on a monthly basis.</td> | Unchanged: <td valign="top" width="391">Stock Valuation in done on a reverse chronological order. That is, stocks, which are received last, are consumed first. Stock on hand is valued on the oldest purchase basis.Generally the chronological calculation is done on a monthly basis.</td> | ||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">Weighted Average</td> | Unchanged: <td valign="top" width="199">Weighted Average</td> | ||
| Deleted: <td valign="top" width="391">By far, the most frequently used method in valuating the stock. In this method stocks are valued on a single average basis, calculated on a periodical basis, usually monthly.The average cost of the stock is calculated and is applied to all the transactions. | Added: <td valign="top" width="391">By far, the most frequently used method in valuating the stock. In this method stocks are valued on a single average basis, calculated on a periodical basis, usually monthly.The average cost of the stock is calculated and is applied to all the transactions. </td> | ||
| Deleted: </td> | |||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">Last Purchase Rate</td> | Unchanged: <td valign="top" width="199">Last Purchase Rate</td> | ||
| Unchanged: <td valign="top" width="391">Stocks are valued simply on the last purchase rate. The stock on hand is valued as per the last purchase rate, even if purchased at different rates. This is used mainly in trades, where replacement cost of material is the major criteria.</td> | Unchanged: <td valign="top" width="391">Stocks are valued simply on the last purchase rate. The stock on hand is valued as per the last purchase rate, even if purchased at different rates. This is used mainly in trades, where replacement cost of material is the major criteria.</td> | ||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: <tr> | Unchanged: <tr> | ||
| Unchanged: <td valign="top" width="199">Standard Cost</td> | Unchanged: <td valign="top" width="199">Standard Cost</td> | ||
| Deleted: <td valign="top" width="391">A fixed rate, called as Standard Cost is used for all stock valuation. This method is mainly used for manufactured items. | Added: <td valign="top" width="391">A fixed rate, called as Standard Cost is used for all stock valuation. This method is mainly used for manufactured items. </td> | ||
| Deleted: </td> | |||
| Unchanged: </tr> | Unchanged: </tr> | ||
| Unchanged: </tbody> | Unchanged: </tbody> | ||
| Unchanged: </table> | Unchanged: </table> | ||
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